Nobel memorial prize in economics awarded to Robert E. Hall and Michael Woodford

American-born economists Robert E. Hall and Michael Woodford were awarded the Nobel memorial prize in economics on Monday. Hall is a professor at Stanford University and Woodford is a professor at Columbia University. The Royal Swedish Academy of Sciences stated the laureates were honored for their work on the microeconomic foundations of macroeconomic stabilization.

The award recognizes their development of models that help governments and central banks manage economic shocks and smooth out economic peaks and troughs. According to Dawn Business, the models were designed to better stabilize disruptive economic fluctuations and manage crises that fail to respond to traditional tools. Rather than relying on statistical links between variables like inflation and consumption, the laureates built their models on a microeconomic foundation that understands how the actions of individual households and businesses affect the economy.

John Hassler, chair of the Committee for the Prize in Economic Sciences, said the laureates' work provides a stable theoretical foundation for models currently used by governments and central banks worldwide. These models better equip officials to handle shocks such as energy crises or sudden changes in household consumption.

Brief written by urgent.news from CBC News, Dawn Business, The Korea Times, CBS News, E24 Norway — 5 reports on this story. Machine-written — may contain errors; check the original before relying on it.